Local economy to grow 1.3% in 2013: Conference Board

A Canadian think tank is downgrading its economic growth forecast for the National Capital Region, citing federal fiscal austerity initiatives and a cooling housing market.

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The Conference Board of Canada says real GDP in Ottawa-Gatineau will increase 1.3 per cent in 2013, down from the 1.9 per cent the organization predicted last September. That ranks the region 26th among 28 census metropolitan areas profiled in a report released Thursday.

Nevertheless, it is still stronger than the 0.9-per-cent growth recorded in 2012.

The Conference Board says nominal spending by the federal government on goods and services - including labour costs - will grow by an average of 1.9 per cent annually between 2013 and 2016, down from the 5.4-per-cent average over the past decade.

Accounting for inflation, The Conference Board says spending will actually decline in real terms by 0.3 per cent annually between 2013-16.

The corresponding declines in public-sector employment will weigh on the region’s labour market, causing overall employment levels to decline 0.3 per cent this year.

There were several bright spots in the report.

In contrast to the expected weakness in the housing market, the Conference Board noted the city’s non-residential construction sector will likely be busy for years to come with projects such as the expansion of the Rideau Centre and Bayshore Shopping Centre, the ongoing restoration of buildings on and around Parliament Hill as well as the redevelopment of Lansdowne Park. There’s also construction of the city’s light-rail line and related widening of Highway 417.

Additionally, the Conference Board says local tech firms could benefit from a recovery in the manufacturing sector and “sound” fundamentals in the global information and communications technology manufacturing industry. However, the strong Canadian dollar will hinder the growth of export-oriented companies, it noted.